Contractual Aspects of Construction Risk Insurance – Practices of Construction Risk Insurance in Construction Industry of Pakistan

Abstract

Accidents are frequent and offer severe in Construction works due to the hazardous nature of these works. The number of deaths, injuries to human bodies and damage to the property per year is on a high in construction. And also construction activities involve large investments in Public Projects. This makes construction business riskier and it becomes difficult and more critical to handle financial matters. Construction Risk Insurance (CRI) is one of the risk management tools which is used by contractors to transfer the risk related to unforeseen circumstances in the construction process. These unforeseen circumstances bear potential risks that may cause damage to life, property and material etc. This study aims at highlighting the contractual aspect and current practices of CRI in construction industry of Pakistan. A number of contractors were surveyed randomly as a sample through a questionnaire in order to determine current practices of CRI in the industry. The above mentioned questionnaire was prepared by keeping in mind the contractual clauses relating to CRI, current practices of CRI in the construction industry of Pakistan and their comparison with the clauses in FIDIC. The study helped in determining the current CRI practices and hence preparing a beneficial set of recommendations to highlight the shortcomings and improvements in the current practices of CRI in Pakistani Construction Industry.